Rights and Duties of Pawnor and Pawnee | Civil Law for Judiciary Exams PDF Download

Rights and Responsibilities in Pawning

• A Pledge Defined: A pledge refers to an item of value utilized as security for a loan. When an individual pawns an item, they offer it as collateral to the lender in exchange for a loan.
• Roles in Pawning
  The Pawner: The pawner is the individual offering the pledge as collateral to secure a loan. They maintain ownership of the pledged item while it's with the lender. The pawner is liable for repaying the borrowed sum along with any interest within a specified period.
  The Pawnee: The pawnee, also known as the lender or pawnbroker, accepts the pledged item and provides the loan. They hold the item as security until the borrower repays the loan in full, including any accrued interest.
• Rights and Obligations: Provisions concerning the rights and responsibilities of both parties involved—pawnee (lender) and pawner (borrower)—regarding the pledged merchandise are outlined in various sections.

Rights of the Pledgee

• Right to Keep the Pledged Items (Section 173): The pledgee is entitled to retain the pledged goods until the repayment of the loan. This right encompasses holding onto the goods for the interest owed and any costs related to their upkeep. Furthermore, the pledgee can enforce a specific lien solely on the merchandise.
• Right to Retain Additional Advances (Section 174): Typically, the authority to retain the pledged items also covers any funds provided by the pledgee to the pledger post the pledge date, unless otherwise specified in a contract.
• Right to Claim Unusual Expenses (Section 175): The pledgee can request reimbursement for any extraordinary costs incurred in maintaining the pledged goods. However, the pledgee is not permitted to retain the goods; they can only seek compensation for the expenses.
• Right Against the True Owner (Section 178A): Even if the pledger's ownership of the pledged goods is flawed but acquired under a reversible agreement, the contract remains valid. In such instances, if the pledgee acts in good faith, they can acquire a valid title to the pledged items.

Actions of the Pawnor in Case of Unauthorized Sale

• The right to commence legal action to redeem the goods by settling the debt.
• The right to claim damages and losses resulting from conversion, which refers to the unauthorized disposal of the pledged goods.

Rights of a Pawnee

• Right to Receive Back the Products: The pawnor is entitled to reclaim the pledged items once they have fulfilled their obligations, such as repaying the loan and any associated interest.
• Right to Retain Goods until Payment: The pawnee has the right to keep hold of the pledged goods until the entire debt, including the principal amount, interest, and other related expenses, is settled. For instance, if someone pledges their gold jewelry to a bank for a loan, the bank can retain the jewelry until the loan amount and accrued interest are repaid.
• Right to the Redemption of Debt: If the pawnor fails to meet their commitments or repay the debt within the agreed timeframe, they can still redeem the pledged items before they are sold. However, the pawnor will be accountable for any costs incurred due to their default.
• Right to Maintenance and Preservation of Merchandise: The pawnee has the authority to ensure that the pledged goods are properly maintained and preserved. They may seek compensation for any exceptional costs but are not allowed to keep the goods.

Rights of the Ordinary Debtor

• Right to Suit: The pawnee can initiate legal action to recover the debt while using the pledged goods as security. They have the option to sue for the sale of the pledged items and the retrieval of owed funds.
• Right to Sell: The pawnee can sell the pledged goods after providing the pawnor with reasonable notice and time. Following the sale, the pawnee can pursue the pawnor for any deficiency, if applicable, and must return any excess proceeds from the sale to the pawnor.

Duties of the Pawnor

• Duty to Reimburse Standard and Extraordinary Expenses: The pawnor must repay the lender for any unusual costs incurred in maintaining the pledged items. For example, if the lender has to cover the expenses for the care of a pledged animal, the pawnor is responsible for reimbursing these costs.
• Duty to Repay the Debt and Any Interest Due: It is the pawnor's responsibility to repay the borrowed amount or fulfill the commitment made regarding the pledged belongings. For instance, if a pawnor offers a valuable item as collateral for a loan, they are obligated to repay the loan to the lender.
• Duty to Pay Claims and Damages or Compensation to the Pawnee: The pawnor needs to inform the lender about any significant defects or risks associated with the pledged belongings that could potentially harm the lender or the intended use of the items. If the lender faces legal consequences due to the pawnor's items, the pawnor is required to compensate the lender for any losses or damages incurred.
• Indemnify the Pawnee: If the lender experiences losses because of issues with the pawnor's ownership of the pledged items, the pawnor must compensate the lender for these losses. This duty ensures that the lender is safeguarded in case any problems arise regarding the ownership or legal status of the pledged items.

Duties of the Pawnee

• Duty to Take Charge of the Pledged Goods: The pawnee must take possession and control of the pledged goods, ensuring their safety and security as if they were their own belongings.
• Duty to Not Make Unauthorized Use of the Pledged Goods: The pawnee is prohibited from using the pledged goods for any purpose other than what is specified in the pledge contract without the pawnor's permission.
• Duty to Return the Pledged Goods: Once the purpose of the pledge is fulfilled, the pawnee is obligated to return the pledged goods to the pawnor, respecting the terms of the agreement.
• Duty to Return any Accretion to the Goods: The pawnee must give back any additional value that accrues to the pledged goods, such as offspring or improvements, to the pawnor when the goods are returned.
• Duty to Not Mix the Pledged Goods: It is essential for the pawnee to keep the pledged goods separate from their personal belongings and avoid blending or mixing them together.

Conclusion

Pawnor's Rights and Duties:

• The pawnor can reclaim pledged goods upon fulfilling promises or repaying debts.
• Responsibility to reimburse standard and extraordinary expenses of the pawnee.
• Must repay debts, interest, pay claims, and damages to the pawnee if needed.
• Indemnify the pawnee for losses due to defects in the pawnor's title to goods.

Pawnee's Rights and Duties:

• Can retain pledged goods until debt payment, including interest and expenses.
• Entitled to keep subsequent advances by the same pawnor.
• Responsibility to manage pledged goods, avoid unauthorized use, and return them after pledge fulfillment.
• Return any increase in value to goods, avoid mixing with personal items.